Liberalised Remittance Scheme (LRS)
- August 23, 2021
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Liberalised Remittance Scheme (LRS)
Subject – Economy
Context – The outflow of foreign exchange under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) has bounced back in the first quarter ended June 30, 2021 after a steep fall during the year-ago period when the Covid pandemic hit countries across the world and travel was banned.
Concept –
- This is the scheme of the Reserve Bank of India, introduced in the year 2004.
- All resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April–March) for any permissible current or capital account transaction or a combination of both.
- Not Eligible: The Scheme is not available to corporations, partnership firms, Hindu Undivided Family (HUF), Trusts etc.
- Though there are no restrictions on the frequency of remittances under LRS, once a remittance is made for an amount up to USD 2,50,000 during the financial year, a resident individual would not be eligible to make any further remittances under this scheme.
- Remitted Money can be used for:
- Expenses related to travelling (private or for business), medical treatment, study, gifts and donations, maintenance of close relatives and so on.
- Investment in shares, debt instruments, and buy immovable properties in the overseas market.
- Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the scheme.
- Requirements: It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) for all transactions under LRS made through Authorized Persons.